292 L.L. Stanley, J.D. Wisner Journal of Operations Management 19 2001 287–306
or valid means of measuring service quality. An evalu- ation of the SERVQUAL instrument, for the purposes
of this research, led to the conclusion that much of the survey instrument did not easily translate to the in-
ternal organizational environment of purchasing. Oth- ers, including Cronin and Taylor 1992, 1994, Teas
1994, and Kaplan and Norton 1992, 1993 argued that performance was more important than perceptions
and expectations and, Finn et al. 1996 specifically developed a new survey instrument to examine inter-
nal service quality performance.
Although previous research is fairly rich con- cerning internal service quality issues and their re-
lationship to service quality provided to external customers, relatively little research was found that
centered on performance measurement issues, or the relationship between internal or external service qual-
ity performance and service quality supplied to the organization. Furthermore, purchasing’s role in the
management of incoming quality from external sup- pliers to internal customers and ultimately, external
customers, has also not been adequately addressed. However, purchasing has been shown to be an impor-
tant participant in supplier development and the im- provement of incoming service quality. Purchasing’s
unique position within the firm, both as customer and internal supplier, provided a research opportunity
to obtain valuable assessments of the processes and activities impacting both internal and external service
quality performance. The following section presents and discusses the framework of internal service qual-
ity and the associated hypothesis.
3. Framework of internal service quality and hypothesis
An extensive review of the literature was used to develop a framework and three related hypothesis of
service quality performance from purchasing’s per- spective see Fig. 1. Arguably, many factors have an
impact on external customer satisfaction with a firm’s products and services. However, organizations today
are increasingly sourcing parts and components from external suppliers rather than manufacturing them. Ad-
ditionally, both manufacturers and service organiza- tions outsource services, including maintenance, food,
and legal services at an increasingly rapid rate. As a result, elements of the purchasingsupplier relation-
ship found to be associated with improved external supplier performance were of particular interest in this
study to determine their effect on internal service qual- ity performance. Thus, activities were identified that
supported a cooperative relationship. Finally, perfor- mance factors related to internal service quality and
their potential link to overall firm performance were specifically of interest, based on the work of George
and Gronroos 1989 and Flynn et al. 1995.
3.1. Do cooperative purchasingsupplier relationships directly affect internal service quality
performance?
The first research question can be examined in the context of Fig. 1. Implementation of activities
to develop more cooperative relationships, including single sourcing, strategic partnerships, joint problem
solving, supplier certification, site visits, and supplier development have empirically been linked to product
quality and employee productivity AQF and Ernst and Young, 1991; Cusumano and Takeishi, 1991;
Hendrick and Ellram, 1993; Krause, 1999; Masson, 1986; Richardson, 1993; Saraph et al., 1989. These
findings suggest that a direct relationship also exists between implementation of cooperative purchas-
ingsupplier relationships and purchasing’s capability to deliver service quality to internal customers.
H
1
. There is a positive relationship between imple-
mentation of cooperative purchasingsupplier relation- ships and purchasing’s service quality performance to
its internal customers.
3.2. Does internal supplier performance moderate the relationship between cooperative
purchasingsupplier relationships and purchasing’s internal service quality performance?
Based on the first hypothesis, additional fac- tors were hypothesized to moderate the relationship
between implementation of cooperative purchas- ingsupplier relationships and purchasing’s internal
service quality performance to internal customers. Moderating variables are said to affect the direction
and or strength of the relationship between inde- pendent and dependent variables Baron and Kenny,
L.L. Stanley, J.D. Wisner Journal of Operations Management 19 2001 287–306 293
Fig. 1. Conceptual framework of service quality in the supply chain.
1986. Internal suppliers generally act in an inter- mediary role, receiving, inspecting, and controlling
the movement of inventory shipments from external suppliers to internal customers. While no empirical
evidence exists to support this contention, it would be logical to assume that the ability of purchasing to
satisfy their internal customers’ requirements would be tied to their internal suppliers’ performance. Be-
cause these internal suppliers react and respond based on actions of the purchasing group but have no di-
rect impact on the quality of incoming products and services, the implication is that internal suppliers
have a moderating effect rather than direct effect on purchasing’s internal service quality to their internal
customers. Stated in hypothesis form:
H
2
. An organization’s internal supplier performance
moderates purchasing’s internal service quality per- formance to internal customers.
3.3. Does purchasing’s internal service quality performance have a direct relationship to external
service quality performance?
Extensive conceptual literature provided a foun- dation for this question, arguing a link between
successful internal service encounters and external customer satisfaction Adamson, 1988; Davis, 1997;
George and Gronroos, 1989; Jablonski, 1992; Milite, 1991; Sanfilippo, 1990. Additionally, Hallowell et al.
1996 determined that several elements of inter- nal service quality performance were related to an
organization’s capability to deliver service quality to external customers. However, Davis 1997 suggested
a danger in satisfying internal customers at the ex- pense of external customers. Flynn et al. 1995 came
closest to studying the relationship between internal and external service quality but could find no direct
relationship. With no clear-cut evidence, defining the parameters of service quality performance and a test-
ing of internal-to-external relationships were clearly needed. The third question, therefore, was whether
purchasing’s level of service quality performance with internal customers would have an impact on their
organization’s ability to satisfy external customers. The relationship proposed in Fig. 1 is supported by
the following hypothesis:
H
3
. There is a positive relationship between the level
of service quality performance purchasing delivers to its internal customers and an organization’s capability
to satisfy its external customers.
4. Research methodology
